Chennai flood: What you need to know about your auto policy?

The claims have just started coming in and the average ticket-size, even for small cars, is Rs 50,000 to Rs 60,000. For highend vehicles -above 1500cc -the averages are much higher at Rs 8-10 lakh.Chandralekha Mukerji | ET Bureau | December 09, 2015, 11:09 IST

You had read through your motor insurance policy and know that your vehicle is covered for any loss or damage caused by natural and man-made calamities, like the floods that ravaged Chennai last week. While insurers are bracing for 10-year-high claims, will you get fully reimbursed for your loss?

The claims have just started coming in and the average ticket-size, even for small cars, is Rs 50,000 to Rs 60,000. For highend vehicles -above 1500cc -the averages are much higher at Rs 8-10 lakh.

It is only when an actual claim arises, that you realise not everything that gets damaged is claimable. There are terms and condition, sub-limits and criteria to be met. For example, the hydraulic lock -through which water enters the engine and stalls it -is the most common car damage in case of a flood.

However, this damage is not covered under a standard motor policy as is mechanical or electrical breakdown. If you are filing for a brake system failure, the claim will be passed only after a survey that establishes the damage was caused by flood water only . Again, while the insurer may be happy to pay for cleaning of interiors and upholstery , the rules for complete replacement are different.

Cases where the vehicle has been completely washed away will be categorised as `complete loss' and the full insured declared value (IDV), post suitable depreciation, will be claimable. If not, the surveyor will put the case under partial loss and one will have to get a refund for repair or reinstatement. A lowdown on common damages and how much the insurer will cough up.

THE ENGINE

The highest number of claims from the Chennai floods are related to vehicles being fully or partially submerged causing huge damage to the engine.

But such damages are not covered under a regular motor policy. Plus, engines that ceased in an attempt to crank up the car when driving through a waterlogged area, won't get reimbursed, unless you had bought an add-on engine protector cover. Hardly anyone opts for this rider unless they are living in a flood-prone zone.

The premium depends on age, make, model and cubic capacity and for a new mid-segment car, it can cost Rs 1500 more for this cover. If you had chose to buy this rider, the claim will be passed after multiple reviews. "The damage is assessed based on the surveyor report, physical inspection by the insurer and the actual dismantling of the engine," says Vijay Kumar, CTO, Bajaj Allianz General Insurance. This is because there are no sub-limits and the firm will pay for engine replacement, if needed.

CAR INTERIORS & UPHOLSTERY

Another sure thing to go if your vehicle has been submerged for days is the interiors and upholstery. Cleaning is covered but there is a depreciation attached if these need replacement. The decision on whether it needs replacement depends on the surveyor's report.

The rate of depreciation for rubber, nylon or plastic parts, tubes, batteries and airbags is 50 per cent. For damage to tyres unless the vehicle was damaged due to the same peril, the cover is only 50 per cent of the cost of replacement. For glass, it is zero. So, if you had to break a window when the locks were stuck due to a short circuit, you'll be fully reimbursed.

Insurers are getting a lot of claims relating to external damages caused by falling of trees and collapsing walls. "We are getting many claims where the vehicle has been swept away by water current and dam aged," says Rajagopal G, senior vice president and head of operations and claims, Bharti AXA GI.

FITTINGS AND CONSUMABLES

The AC might get damaged while driving through stagnant water. You are safe if it was factory-fitted. If it was not, unless you had intimated your insurer and paid extra premium, you won't get any money for replacement or repair.Same for any other additional fittings like a music system or a CNG kit.

Consumables like nuts and bolts, screw, washers, grease, lubricants clip, bearings, distilled water, engine oil, oil filter, fuel filter and brake oil, among others, are not covered under a standard policy. Even if you had bought the add-on consumables cover, the loss won't be made good unless the parts were replaced within three days from the date of loss.

Prices of most SUVs were cut between Rs 1.1 lakh and Rs 3 lakh following the implementation of GST, which subsumed over a dozen central and state levies like excise duty, service tax, and VAT from July 1.